Consumer Behavior and Nelson Predictions


ConsumerBehavior and Nelson Predictions

ConsumerBehavior and Nelson Predictions

Thepredictions by Philip Nelson are valid in the current consumer andbusiness environment in relation to the consumption behavior of theformer. However, the extent of validity and relevance of thesepredictions depends on the extent of the influence of access toinformation by consumers and information sharing in the market. Thedevelopment of social media is the most influential factor that hasaffected the validity of these predictions. According to Kardeset al (2011), social media sets a global platform for sharinginformation that makes the market even to the business units andconsumers.

Thefirst prediction on the monopoly for experience goods than searchgoods is still valid since social media has enabled people to shareexperiences better. According to Nelson(1970), same caseapplies for durable goods than non-durable goods and it is valid todate. For example, there is more monopoly for the experience betterlike wine than it is in the case of goods like soft drinks. This isbecause of the validity of the second prediction because social mediahas enabled people to share their experiences about goods. Therefore,there is more reliance on the recommendation from people beforebuying goods, leading to the rise of referral marketing.

Therefore,the third prediction is validated for stores that sell such goodshave and will have more sales than those that sell experience goods.This is because consumers refer to others to experience in the caseof goods like wine other than for such goods like soft drinks.Consequently, the fourth prediction on advertising is validated sincesellers will advertise search goods more to attract buyers. Forexperience goods, consumers have to refer to experience. According toNelson (1970),this reduces theinfluence of retail advertising. In this regard, the fifth predictionis definitely true due to the advertising and direct purchasing habitby consumers. This is against experience goods where consumers areless concerned with the advertisement but more influenced byrecommendations, which is facilitated by social media.


Kardes,F.R., Cronley, M.L., &amp Cline, T. W. (2011). ConsumerBehavior. Mason, OH&nbsp: South-Western, Cengage Learning

Nelson,P. (1970). &quotInformation and Consumer Behavior&quot, Journalof Political Economy,78(2), 311-329 (1970)